1details of parties

1.1The names and addresses of the party to the separate reference are as follows:-

(a) {Virgin} West Coast Trains Ltd. whose Registered Office is at 120 Campden Hill Road, London, W8 7AR ("WCTL") ("the Claimant");

(b) Correspondence Address: Virgin Trains Commercial Department, Room 15, North Wing Offices, Euston Station, London NW1 2HS.

2The Parties’ right to bring this reference

2.1These matters are referred to the Timetabling Panel ("the Panel") for determination in accordance with condition D3.5.4 of the National Rules of the Plan and Conditions D.2.1.11b and D.5.1 of the Network Code.

3Contents of reference

The Parties have been advised that due to time considerations, each proposes its own individual reference rather than a joint reference and as such includes:-

(a)The subject matter of the dispute in Section 4;

(b)A summary of the issues in dispute in Section 5;

(c)A detailed explanation of the issues in dispute prepared by the claimant in Section 6;

(d)Section 7 Not Applicable;

(e)The decisions of principle sought from the Panel in respect of legal entitlement and remedies in Section 8; and

(f)Appendices and other supporting material.

4subject matter of dispute

4.1The principle issue regarding West Coast Trains Ltd. dispute is the affect of the proposed possession plan [NAUM-30] on its business and operations throughout the remaining part of this year and into 2009. WCTL does not consider that Network Rail, in consideration of its proposals and indeed WCTL response to the Preliminary Proposal(s) [NAUM-13], and in association with our previous response to Network Rail’s West Coast Route Modernisation [WCRM] Delivery Plan (drafted as a consequence of the Office of the Rail Regulator [ORR] Provisional Order on Network Rail), and as explained in detail in sections 5 to 6 below, has applied certain crucial elements of Decision Criteria reasonably, such that we will not be able to operate those services as contained within and supported through, WCTL current Firm Access Rights1 (Best Achievable Access Rights [BAARS]), and the obvious consequential affects as such, on WCTL business.

4.2Section 7 additionally contains specific items of dispute in conjunction with individual possessions and covers issues not directly related to Decision Criteria. There is also a section on potentially clashing possessions which have a direct impact on WCTL ability to operate robustly ‘over and above’ the affects of NAUM-30 proposed possessions. The principle of a lack of diversionary and non WCML route capability information also forms part of this section.

4.3The Parts / Conditions that this dispute relate to or are associated with, is the reasonable application of specific elements of the Network Code in particular, the reasonable application of Decision Criteria [D.6] in conjunction with parts D2.10; D2.1.11(ii) and D.5.1 and sections 3.1, 3.4 & 3.5 of the National Rules of the Plan {2008}, especially when considered against the overall affect to the business, operations and delivery of WCTL train services.

4.4Copies of the relevant extract(s) from the document(s) referred to above are attached as Annex “A”.

4.5Annexes B to J are also attached below for reference purposes, and are accordingly referenced throughout sections 5 - 7 below, indexed accordingly under section 10.

1WCTL Firm Access Rights are currently expressed within a BAARS-10 Agreement which operates from May 18th until 13th December 2008. After this date it is currently envisaged that our new ‘Very High Frequency’ [VHF] timetable, implemented through the introduction of a complete new set of Firm Access Rights, subject to, but without prejudice to, the ensuing Industry wide consultation process being undertaken by the ORR, through WCTL recently submitted Section 18 application.

5summary of dispute (background)

5.1As one consequence of the overrunning WCRM Engineering works at the start of this year, and in conjunction with a subsequently detailed investigation into those reasons for such an overrun as led by the ORR2, it was announced that, through the serving of a Provisional Order on Network Rail in February 2008, that Network Rail would need to formulate a WCRM Upgrade Delivery Plan by the end of March 2008, such plan able to adequately demonstrate the methodology and strategy necessary to deliver robustly and safely, all the remaining West Coast Main Line [WCML] Upgrade Works.

5.2Such a plan to which all affected parties would be able to respond, was presented to the Industry during March, and included a range of Options [A, B & C] which would, if implemented, deliver those infrastructure works necessary to complete the West Coast Upgrade. Each of the three options presented, offered different solutions with two different completion dates – either 8th December 20083 (Options ‘A’ or ‘B’) or 17th May 2009 (Option ‘C’) – See Annex “B” for full details of these Options.

5.3In response to the ORR’s order, Network Rail initiated discussions with affected parties including ourselves, either through the wider forum of the West Coast Project Board or through Individual bi-lateral meetings. It was through such sessions that WCTL insisted upon Network Rail that whatever solution was to be adopted, it must adhere to our contractual obligations (including the ability to operate our Firm Access Rights [BAARS10], alongside the carrying out of our reasonable operating & business expectations, in union with those interests of our travelling passengers.

5.4After such deliberations as outlined above, and after due consideration of WCTL response to Network Rail’s overall Delivery Plan, Network Rail decided that the Industry should adopt Option ‘B’. In cognisant of this particular dispute paper, Option ‘B’ therefore represents those possession proposals presented within the initially proposed NAUM-13 (Preliminary Proposal(s) – dated 12th March 2008) and consequently (to which this dispute relates), the Final Decision Proposal(s) NAUM30 - dated 2nd April 2008).

2WCTL requested of the ORR in early January 2008, that they consider the merits of a Provisional Order under Section 55 of the Railway’s Act, requiring Network Rail to provide a robust plan that would clearly demonstrate its ability to not only deliver the Upgrade works, but also maintain the WCML once complete. Such a plan would need to clearly set out all the possessions required, with a risk assessment for each site and the mitigation measures and contingencies needed to be put in place, necessary for delivery. The plan presented would have to give WCTL the confidence that they could plan their business properly and secure public interest going forward.

3Due to Major Engineering Works in the Milton Keynes Area during Christmas & New Year 2008/09, it is acknowledged that the VHF timetable will not actually be introduced in earnest until 5th January 2009.

5.5The possession proposals that form Option “B”, represent Network Rail’s preferred Delivery Plan for December 2008. In consideration of such proposals Network Rail have not, as far as WCTL are concerned; neither:

a) taken cognisant of those comments put forward by us in our response to the overall

Delivery Plan, nor ……..

b) reasonably considered our comments in response to NAUM-30 – {See Annexes C & D}

5.6Such comments relate to an unreasonable application of Decision Criteria by Network Rail, when considering WCTL inability to:

i) Comply with Informed Traveller timescales for Period “D” & the process associated with implementing FIREWALL possessions D.6(c);

ii) Operate all its Firm Contractual Access Rights D.6(c);

iii) Maintain and improve its levels of Performance D.6(d)

iv) Maintain Connections between its & other Operator’s services D.6(f);

v) Avoid a material deterioration of its service patterns & frequencies D.6(g);

vi) On occasion, the even spread of passengers vs. an uneven spread of services D.6(h);

vii) Utilise its assets efficiently, without the need to increase such assets D.6(j)

5.7The majority of possession proposals require the closure of the WCML South of Crewe, including a number of weekday requirements, and thus constitute to one of the most important issues of this dispute for WCTL. Although the Upgrade is obviously recognised as a major benefit for the Industry in general, it is essential to introduce such benefits in a safe and robust manner. One of our previous fundamental rejections of Option “B”, is due to the impact on our Driver Training programme, which although not able to be made specifically the subject matter of this dispute, does infer Network Rail’s disregard of certain Decision Criteria.

5.6The majority of possessions as proposed under NAUM-30 have been disputed on the basis of a number of comparable Decision Criteria issues (5.6 above refer), which in view of the timescales prior to the hearing and the sheer volume of possession proposals in dispute, are detailed for ease of reference under each Decision Criteria item within Section 6 below. However, specific issues pertinent to individual possession proposals including clashing possessions, are outlined for clarity in section 7.

6explanation of each issue in dispute (To beused with Annexes “C to E”)

“Whilst being conscious that no individual Decision Criteria has precedence over any others, and that all issues outlined below will be integral to one another, WCTL nonetheless attempts to provide evidence that Network Rail, in assessing the various Options available to them, as well as taking cognisant of the consultation and responses associated with the initial Delivery Plan, and, as a consequence, its presiding position regarding the possessions proposed through NAUM-30 (and initially NAUM-13), and thus forming the subject matter of this dispute, have taken no reasonable regard to the overall impact to WCTL business and operations, and as such reflects, in WCTL view, an unacceptable regard to various elements of Decision Criteria”.

6.1.Decision Criteria D.6(a)

6.1.1Thisgeneral item concerns all those possession proposals hereby disputed, and is pertinent to a general point regarding Network Rail’s lack of consideration regarding “Safety of the Network” in conjunction with WCTL Driver Training requirements4; WCTL has already rejected and shared with Network Rail (Annex “E” refers) its views regarding this issue, a point that we believe, will be further exacerbated through the fact that under this Option ‘B’, a number of iterative driver training schemes will need to be underway at the same time, (appropriate to the number of intermediate infrastructure layouts liable to be in place at any one time).

6.1.2Furthermore ….”the sharing of capacity and securing the development of the Network for the carriage of passengers in the most efficient and economical manner in the interests of all users of railway services”….is not valid due to the need to significantly reduce our timetable plan (approx 43 full & 16 part cancellations each SX day) in order to release sufficient numbers of drivers for a total of up to three months. How can this be defined as ….”efficient and economical”…. when the eventual output not only considerably disrupts our business market (not only to those that travel on the day, but also the long term affect on market growth), but would also have a significant overcrowding affect on those remaining WCTL daytime services such that it would import additional safety risk to staff and travelling public alike, as well as the affect of increased road congestion and its potentially economic influence on national business; environmental pollution – more cars & increased air travel, etc.

4For clarity purposes, although not specifically related to “Major” enhancement and/or re-signalling proposals south of Stafford, any possession proposal in relation to “Line Speed Enhancement” work, will also potentially have an affect on such driver training programme(s).

6.1.3 Such possession proposals could also import risk to the maintenance and renewal requirements elsewhere on the WCML, due to a requirement to transfer resources and equipment to those priority possession requirements. Despite a request for a full and explicit understanding of the impact of such proposals in our original pursuit of the Delivery Plan, we still do not fully understand the potential risk(s) to ongoing “Day to Day” infrastructure management over the WCML.

6.1.4All of the above suggests to WCTL, that Network Rail have not, in light of the particular circumstances surrounding each ‘Final Decision’ proposal, reasonably considered the wider, operational, safety and economic implications and/or risks associated with the majority of those possessions contained within NAUM-30.

6.2.Decision Criteria D.6(c)

6.2.1This particular matter, relative to such possessions as proposed in the earlier part of NAUM-30, as well as relevant to all “FIREWALL” Possession proposals, focuses on WCTL inability to comply with the Informed Traveller process, and its applicable deadline requirements as a direct result of proposals being proposed past the T-12 cut-off. This has a fundamental affect on the ability to comply with our Passenger Licence Conditions5 especially in consideration of not being able to permit reservations to be made on trains, due to a lack of timetable information and, as consequence of such actions, putting severe restrictions on the availability of reduced rate value tickets. Such actions therefore also jeopardise certain obligations contained in our Franchise Agreement5, particularly under Schedules 1.2.8 and 1.4.

6.2.2Aside from the fact that Network Rail will be in breach of their Licence Condition Part 9, they will also, not be in the otherwise acceptable position to instigate those “Procedures for Altering Rules of the Route/Plan other than through the Twice Yearly Process having effect from a Principal and/or Subsidiary Change Date” (PARTP) where Network Rail ….” is committed to the achievement of the Informed Traveller deadlines resulting in details of amended train services being available 12 weeks before the date of Operation”.

5Information included for supporting purposes only – no Annexed details apply.

6.2.3Possessions which have been incorporated within NAUM-30 but which are expected to be implemented with less than 12 weeks notice, are not acceptable to WCTL, not only for the non compliance issues outlined above, but primarily also because of the impact on the timetable and the obvious disruption caused to our passengers, operations and resource management. Such possessions if agreed (Option “B”), would require WCTL to cancel / amend numerous services over the period from June to August (see 6.1.2 above); necessitating a complete re-write of the timetable and associated diagrams. Such a large re-planning exercise, would not only contravene T-12 timescales, but also the resource (staff) affect would impact on normal Short Term Planning [STP] workstreams and timescales. Combined with the above will be the abject failure to robustly inform passengers sufficiently far enough in advance of those changes to their services, and, as we enter the holiday season, could detrimentally affect such travel arrangements.

6.2.4Clearly Network Rail have proposed such possessions knowing full well that they would not be compliant with a) the aforementioned contracts and licences, b) the ability to offer us our Firm Access Rights [BAARS10] and c) compliancy with the PARTP and D2.1.10. In proposing actual FIREWALL possessions where Network Rail could knowingly cancel such possessions with only 6-8 weeks notice, would again require WCTL to completely re-write the Timetable & Diagrams (i.e. back to the standard daily plan) and therefore upload the changes only 4-6 weeks prior to implementation. The obvious affect on the ‘passenger’ in terms of reservation capability, and the ability to obtain train times would be without doubt, a major problem; indeed those passengers that may have booked well in advance (and not through the internet) would probably remain unaware of any such changes until they turned up on the day.

6.2.5All of the above therefore, whilst applicable to issues concerned with the T-12 process, do not, in summary, adequately enable us, (through those proposals submitted by Network Rail under NAUM-30), to comply with the following contracts / agreements:

a)The Network Code (parts D2.1.10 & D2.1.11);

b)Section 3 of the PARTP6;

c)Best Achievable Access Rights (Issue 10 – Firm Access Rights)

c)Passenger Licence Conditions;

d)Passenger Franchise Agreement

e)Network Rail Licence Condition Part 9

f)ATOC’s Code of Practice / National Rail Obligations.

6TTP194 & TTP195 Determination Para 23 also refers – see Annex “H”

6.3.Decision Criteria D.6(d)

6.3.1In the event that those proposals contained in NAUM-30 are agreed, the impact on maintaining and improving service reliability would be seriously put at risk, both during and immediately after implementation.

6.3.2During periods when routes are closed or significantly reduced (in terms of capacity) for engineering work requirements, the probability of importing significant additional risk into the operations of train services is always liable to be higher than during periods of normal operation. There is the risk to maintaining service reliability if engineering works either over-run, require short notice isolations, require diversions of services over other intensively used routes (eg. Coventry corridor vice Trent Valley), importing delay through safety issues as a result of overcrowding (services thinned out), and the potential for diagramming and/or resource issues (as a consequence of the magnitude of engineering impact) which could lead to delays or cancellations in train services on the day etc.

6.3.3It is also apparent to WCTL, that if this range of ‘Option B’ possessions was to be implemented there is an inherent risk to operations in that there would have been no real opportunity thus far, within which our drivers would have had time to familiarise themselves with the ‘actual’ operations and infrastructure – infrastructure that would still be undergoing signalling commissioning & testing etc., on Sunday 7th December, the day before VHF is currently expected to be introduced. Even if delayed until January 2009 (see footnote 3), there would still be no extended opportunity to familiarise themselves sufficiently with the actual layout(s), such that it would allay our safety concerns. Such risks we believe would increase the probability of delay rather than maintain or improve service reliability and performance. During periods of weekday closures such problems could be exacerbated due to the increased intensity of services across the system.

6.4.Decision Criteria D.6(f)

6.4.1In the event that those proposals contained in NAUM-30 are agreed, the impact on maintaining and improving connections during the numerous route closures would be put under severe strain. Although there is no obligation on WCTL to maintain and/or provide connecting services either into or out of its own or other Train Operators services, it is widely expected throughout the Industry that connections are maintained where reasonable to do so. Therefore any delay or cancellation of services which ‘connect’ into others as a result of engineering works is unacceptable, particularly in key locations such as Crewe for Chester, Preston for Lancaster, Barrow & Windermere etc.